Wednesday 14 November 2018 by Stephen Mackie Sales commentary

FIIG active portfolio for October

Did you trade last month? Find out if it was in one of our most actively traded securities as we present the Top 10 October trades. 

Active portfolio

Key features of the October active portfolio

 Weighted average yield to maturity:  6.06%
 Weighted average term until maturity: 8.63 years


October Portfolio Updated Wire 15 Nov

Themes in October

In October, investors took advantage of a new issue with Next Generation Clubs Australia Pty Ltd announcing its intention to ‘tap’ its existing senior secured bond for a further $15m.

Another major theme has been the demand for floating rate notes as Australian corporates are predominately issuing fixed rate bonds.

Issuer overview

Issuer

 Description

Centuria Capital No. 2 Fund
Centuria Capital No. 2 Fund (Centuria) is a 100% owned subsidiary of Australian ASX listed specialist investment manager, Centuria Capital Group.  It is guaranteed by Centuria Group an ASX listed specialist investment manager with AUD4.9bn in funds under management at the end of FY18. Centuria’s investments are characterised by the diversity of its portfolio, both in terms of location and tenants which include - Woolworth’s, Insurance Australia Group, Bluescope Steel and GE Capital.

Insurance Australia Group LimitedInsurance Australia Group Limited (IAG) is the parent company of a general insurance group with controlled operations in Australia, New Zealand, Thailand, Vietnam and Indonesia. Its businesses underwrite over AUD11bn of premium per annum. IAG is an ASX Top 25 company with a market capitalisation over AUD16bn as of 12 November 2018 (ASX: IAG).

La Trobe (RMBS)La Trobe, founded in 1952, is an Australian privately owned nonbank financial institution that specialises in residential and commercial property lending. It provides home loans to consumers who fall outside the lending criteria of traditional bank and prime nonbank lenders. In particular, La Trobe is a regular issuer that has raised more than AUD1.4bn in domestic and international capital markets across five transactions. We consider La Trobe to have adequate servicing and underwriting standards as well as arrears management process.

Newcastle Coal Infrastructure Group (USD)NCIGH, the holding company of Newcastle Coal Infrastructure Group Ltd. (NCIG), is owned by five coal mining companies (shareholders). NCIG holds the long term lease on the Kooragang Island coal export terminal at the Port of Newcastle. NCIG shipper mines and projects generally rank as some of the most cost competitive mines globally. NCIG's cashflows are relatively stable, reflecting the take or pay agreements (rolling 10 year agreements) in place with shippers, which cover the full capacity of the terminal.

Next Generation ClubsNext Gen owns and operates six health clubs across Australia and in New Zealand. It has approximately 28,000 members. The clubs differentiate themselves as a higher end multi service offering with facilities including tennis and squash courts, indoor and outdoor pools, spas, saunas, café and lounge, function rooms and full service gyms. Next Gen benefits from diversity of club location and some diversity of revenue streams. Compared to typical gym members, Next Gen’s members are generally more affluent, older, potentially value a multi-service offering more and are less likely to be “gym hoppers”.

Nufarm Americas Inc.
& Nufarm Australia Limited (USD)
Nufarm is one of the world's leading crop protection and specialist seeds companies manufacturing & selling a wide range of herbicides, insecticides and fungicides to over 100 countries. Nufarm has a leading position in the crop protection industry due to a combination of innovating product development, a comprehensive product registration portfolio and related expertise, and an integrated global manufacturing, marketing and distribution platform. S&P highlighted that the company has good global diversity, with revenue from Australia and New Zealand of 21%, North America 24%, Europe 17%, South America 26%, and Asia 5% in FY17.

Pacific National            

Pacific National (“PN”) is Australia’s largest national rail freight processor. PN presides in approximately 60 locations throughout Australia. Around half of PN’s revenues come from coal as a product of its position as Australia’s largest provider of strategic rail freight services in Australia. PN maintains a strong ability to reduce debt if required and this bond makes their debt profile very manageable – as a result they are rated investment grade. PN has a strong market position in Australia with market shares of 48% in New South Wales and 24% in Queensland.

Suncorp Group Ltd      Suncorp is a top 20 ASX listed company with over 14,500 employees. Australian financial conglomerates, including Suncorp, benefit from operating in an economy characterised as having a very high degree of economic resilience. Suncorp also maintains a well diversified business portfolio, dominated by its well regarded general insurance division.

Sydney Airport FinanceSydney Airport Finance is a financial subsidiary of Sydney Airport Corporation, who are the lessee and operator of Sydney’s Kingsford Smith Airport, being Australia’s largest airport.  Sydney has Australia’s largest airport which remains the key national hub both domestically and internationally. Sydney Airport also has significant revenue diversification through a number of revenue streams.

zipMoney

zipMoney originates unsecured line of credit loans offered to customers to fund purchases with accredited merchants. Since commencing originations in 2014, ZIP has experienced rapid growth in customer accounts and its loan book. Now that the systems and operating structure of ZIP have been established, the business represents a low capex fintech with commercial viability largely a function of successful acquisition and retention of customers. All of ZIP’s portfolio has been subject to more rigorous underwriting standards than its more established peers, particularly with regard to responsible lending practices


If you want to buy any of these bonds, please call your FIIG relationship manager.

If you are new to bonds, please call 1800 01 01 81 to speak to one of our experts.

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